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The U.S. Securities and Exchange Commission (SEC) filed suit against Binance, its U.S. platform and CEO Changpeng Zhao (CZ) in the District Court for the District of Columbia. There were 13 charges, including unregistered offers and sales of the BNB and BUSD tokens, the Simple Earn and BNB Vault products and its staking program. In addition, the SEC alleges in the suit that Binance failed to register its Binance.com platform as an exchange or a broker-dealer clearing agency. CZ was sued as a "controlling person." https://www.sec.gov/news/press-release/2023-101

Ethereum suffered a technical issue on Friday, causing its network to halt finalizing blocks for more than an hour. Finality takes roughly 15 minutes, and refers to the guarantee that a block cannot be altered or removed from the blockchain without burning at least 33% of the total staked ETH. The network lost finality for roughly an hour midday Friday, in what appears to be the second issue of its kind in 24 hours. On Thursday, blocks were being proposed but not validated during a 25-minute window on Thursday.

The Monetary Authority of Singapore (MAS) announced new requirements for Digital Payment Token (DPT) service providers to safekeep customer assets under a statutory trust before the end of the year (2023). This will mitigate the risk of loss or misuse of customers' assets, and facilitate the recovery of customers' assets in the event of a DPT service provider's insolvency. MAS will also restrict DPT service providers from facilitating lending and staking of DPT tokens by their retail customers.

"At the Ethereum Community Conference in Paris, the Ethereum blockchain's co-founder, Vitalik Buterin, shared what he expects for Ethereum in a post-Merge era. Buterin closed the conference by sharing that after the Merge, Ethereum will only be about 55% complete. The Merge refers to when the current proof-of-work (PoW) Ethereum mainnet protocol will "merge" with the Beacon Chain proof-of-stake (PoS) blockchain system and continue as PoS. So where does that leave Ethereum in a post-Merge world? Many have looked at the Merge as the grand finale for the network. But now, according to Buterin, Ethereum will be tackling "the Surge, the Verge, the Purge and the Splurge.""

Proof-of-stake- based blockchain Celo suffered from an on-and-off network outage for 24 hours on July 14. It was the network's first outage since the mainnet launch in April 2020. Celo is an open-source blockchain that enables users with phone numbers to make payments with crypto by using their phone numbers as a proxy for public keys.

"Avalanche is a Proof-of-Stake (PoS) platform for creating digital assets, smart contracts, and application-specific blockchains. The network has a two-pronged strategy for optimizing performance: 1) novel consensus mechanisms that offer high throughput and speed with low fees, and 2) scaling horizontally by allowing projects to deploy their own subnetworks (subnets)."

"The digital euro will need safeguards in place to stop governments from snooping on people's online spending habits, according to the architect of one of the world's first central bank-backed digital currency."

"In this paper, we analyze various Decentralized Finance (DeFi) protocols in terms of their token distributions. We propose an iterative mapping process that allows us to split aggregate token holdings from custodial and escrow contracts and assign them to their economic beneficiaries. This method accounts for liquidity-, lending-, and staking-pools, as well as token wrappers, and can be used to break down token holdings, even for high nesting levels. We compute individual address balances for several snapshots and analyze intertemporal distribution changes. In addition, we study reallocation and protocol usage data, and propose a proxy for measuring token dependencies and ecosystem integration. The paper offers new insights on DeFi interoperability as well as token ownership distribution and may serve as a foundation for further research."

Bloomberg's Joe Weisenthal makes the same point I've been making for many months. "Basically [crypto-assets are] just tech stocks. Not only are the coins trading in line with each other still, they're still basically trading in line with the Nasdaq 100... What does this all mean? One possibility is that the marginal crypto-asset buyers just doesn't care about any of this stuff. Proof-of-work? Proof-of-stake? The merge? Inflation hedging? The halving? Deflationary monetary policy? What's all that stuff? In other words, it's possible that there's a small coterie of people paying attention to any of this. And that what's really driving price is just the animal spirits of a much larger group of speculators, who are also moving the price of Zoom or Tesla or Meta or whatever else.

"I just wrote my first story for MIT Tech Review. It is an explainer piece on Ethereum's move to proof of stake. What follows are notes from the story - along with additional ramblings and quotes from your favorite crypto skeptics."

"Espresso Systems is developing Espresso: a layer 1 blockchain system that combines proof-of-stake consensus and a ZK-Rollup mechanism to achieve high throughput and low fees. Espresso has also developed Configurable Asset Privacy for Ethereum (CAPE), an application that can run on any EVM blockchain (and will eventually run on Espresso natively). CAPE enables asset creators to offer users customized privacy guarantees."

"Though future events are always unknown, you can make reasonable bets about what may happen based on research, data and an understanding of trends. Crypto-based prediction markets make this "bet" explicit, by offering an opportunity for anyone to stake money on what they think will happen. Andrew Eaddy and Clay Graubard, founders of Baserate.io, discussed just this on the Big Ideas stage at Consensus 2022 in Austin, Texas, on Saturday. Their platform, called Baserate.io, enables people to buy shares in the probability of future events."

Insurtech Lemonade has launched its blockchain- and stablecoin-based parametric climate risk insurance in Kenya's Taita Taveta County. 6,000 insurance policies were issued by the Lemonade Crypto Climate Coalition, constituted as a decentralized autonomous organization (DAO) on Avalanche, an eco-friendly proof-of-stake blockchain. Farmers sign on their feature phones on which they also pay their insurance premiums using stablecoins or local currencies to cover their entire crop against drought and flood. When the season is over, parametric weather results are gathered and payouts are automatically made to farmers in drought or flood affected areas, with no claims filing process. https://investor.lemonade.com/news-and-events/news/news-details/2022/The-Lemonade-Foundation-Turns-to-Blockchain-to-Protect-Subsistence-Farmers-from-Climate-Change/default.aspx

Georgetown University's Adam Levitin examines the lack of bankruptcy protection for people who entrust their assets to U.S.-based crypto-asset exchanges. He makes a case that legally, crypto-assets "deposited" with exchanges, are actually sales with the "possessory interest" going to the exchange. If the exchange goes bust, a "bankruptcy estate" is created, and those coins become its property, as do any coins that have been staked (placed in escrow) via the exchange. Secured creditors get first dibs on whatever is in the estate, so unsecured creditors (i.e., crypto "depositors") might get nothing. And any assets remaining for distribution to unsecured creditors may be frozen for years, and their values based on their value when the exchange tanked. Plus, the bankrupt exchange can legally claw back many of the withdrawals its depositors made over the 90 days before the bankruptcy.

The U.S. Securities and Exchange Commission (SEC) issued Coinbase a Wells notice, warning that it identified potential violations of U.S. securities law. Based on discussions with the SEC staff, Coinbase believes they relate to aspects of the Company's spot market, staking service Coinbase Earn, Coinbase Prime and Coinbase Wallet, and the potential civil action may seek injunctive relief, disgorgement, and civil penalties. https://www.coinbase.com/blog/we-asked-the-sec-for-reasonable-crypto-rules-for-americans-we-got-legal

"The Ethereum "Shapella" upgrade, scheduled to take place April 12, 2023 at 22:27 UTC, is expected to bring a single important change to the Ethereum ecosystem: introducing the ability of validators to withdraw their stake, which was heretofore locked in the Beacon Chain. The Shapella upgrade includes both the Shanghai upgrade on the Ethereum execution layer (EL) and the simultaneous Capella upgrade on the consensus layer (CL), or Beacon Chain. The Shapella upgrade is an important step forward for Ethereum, and it has been eagerly anticipated by Ethereum developers, institutional investors, and commentators alike. We'll take a closer look at the key features and expected outcomes of the upgrade. "

"What exactly is the fork, in layman's terms? How will it affect the price of ETH now and in the future? Which parts of De-Fi it is likely to effect? Will it impact the smooth running of the Lido liquid staking service and/or the Aave lending protocol? What other risks should we be watching for over the next few weeks? "

"The crisis that has engulfed crypto in the last year is a crisis of fractional reserve banking. Silvergate Bank and Signature Bank NY were fractional reserve banks. So too were Celsius Network, Voyager, BlockFi, Babel Finance and FTX. And still standing are the crypto fractional reserve banks Coinbase, Gemini, Binance, Nexo, MakerDAO, Tether, Circle, and, I would argue, every one of the DeFi staking pools. All of these are doing some variety of fractional reserve banking. Custodia Bank and Kraken Finance claim to be full-reserve banks - but 100% reserve backing for deposits is both hard to prove and not a guarantee of safety. What do I mean by "fractional reserve banking"? My definition might surprise you. For me, fractional reserve banking simply means that the composition of a bank's assets is less liquid than that of its liabilities."

A recent Bloomberg article has brought attention to the Ethereum's validation network's over-dependence on the Geth software client that nearly 80% of validators depend on to keep the network running. Coinbase, Binance and Kraken, who are among the validators who rely solely on Geth for their Ethereum services, operate a staking-as-a-service business model, whereby customers give them their tokens to lock up on Ethereum on their behalf. Concerns have been sparked since recently less-used Nethermind crashed for a few hours, and Coinbase and Kraken are now both exploring new smaller clients for their platforms.

The Monetary Authority of Singapore (MAS) has introduced cryptocurrency-related amendments to the Payment Services Act, focusing on digital payment token (DPT) service providers, including guidelines for digital asset custody. Under the new guidance, customers' digital assets held in trust must be segregated from the assets of the service provider, and at least 90% of customer assets must be stored offline in cold wallets. The guidelines also mandate that service providers prevent retail customers from engaging in activities like pledging, lending, or staking their digital assets. https://www.mas.gov.sg/news/media-releases/2024/mas-expands-scope-of-regulated-payment-services